During the summer of 2010, the dozen or so accountants and tax agents of Group 7822 of the Internal Revenue Service office in Cincinnati got a directive from their manager. A growing number of organizations identifying themselves as part of the Tea Party had begun applying for tax exemptions, the manager said, advising the workers to be on the lookout for them and other groups planning to get involved in elections.

The specialists, hunched over laptops on the office’s fourth floor, rarely discussed politics, one former supervisor said. Low-level employees in what many in the I.R.S. consider a backwater, they processed thousands of applications a year, mostly from charities like private schools or hospitals.

For months, the Tea Party cases sat on the desk of a lone specialist, who used “political sounding” criteria — words like “patriots,” “we the people” — as a way to search efficiently through the flood of applications for groups that might not qualify for exemptions, according to the I.R.S. inspector general. “Triage,” the agency’s acting chief described it.

As a grim-faced President Obama denounced the “inexcusable” actions of the I.R.S. last week and lawmakers of both parties lined up in Washington on Friday to accuse it of an array of misconduct, everything seemed so clear: the nation’s tax agency had deliberately targeted conservative activists, violating the public trust — and perhaps the law.

While there are still many gaps in the story of how the I.R.S. scandal happened, interviews with current and former employees and with lawyers who dealt with them, along with a review of I.R.S. documents, paint a more muddled picture of an understaffed Cincinnati outpost that was alienated from the broader I.R.S. culture and given little direction.

Overseen by a revolving cast of midlevel managers, stalled by miscommunication with I.R.S. lawyers and executives in Washington and confused about the rules they were enforcing, the Cincinnati specialists flagged virtually every application with Tea Party in its name. But their review went beyond conservative groups: more than 400 organizations came under scrutiny, including at least two dozen liberal-leaning ones and some that were seemingly apolitical.

Over three years, as the office struggled with a growing caseload of advocacy groups seeking tax exemptions, responsibility for the cases moved from one group of specialists to another, and the Determinations Unit, which handles all nonprofit applications, was reorganized. One batch of cases sat ignored for months. Few if any of the employees were experts on tax law, contributing to waves of questionnaires about groups’ political activity and donors that top officials acknowledge were improper.

“The I.R.S. is pretty dysfunctional to begin with, and this case brought all those dysfunctions to their worst,” said Paul Streckfus, a former I.R.S. employee who runs a newsletter devoted to tax-exempt organizations. “People were coming and going, asking for advice and not getting it, and sometimes forgetting the cases existed.”

Who gets the blame and how far it goes are questions already consuming Washington. Two top I.R.S. officials have resigned, including the acting commissioner, Steven Miller. The Justice Department has begun an investigation into potential civil rights and criminal violations by the I.R.S. This week, a House committee will seek to depose five I.R.S. employees, including a midlevel executive in Washington and a Cincinnati specialist said to have handled the cases in the spring and summer of 2010.

“I think that what happened here was that foolish mistakes were made by people trying to be more efficient in their workload selection,” Mr. Miller testified before a House committee Friday. While “intolerable,” he said, it “was not an act of partisanship.”

As a storm of criticism washes over what is — even in the best of times — the federal government’s most reviled agency, some of those in Cincinnati agreed.

“I don’t believe there’s any such thing as rogue agents — there are some that aren’t as competent as others, just like in any workplace,” said Bonnie Esrig, a senior manager in the I.R.S. office who retired in January, in part over disagreements with other officials there.

“I was not a happy camper leaving that organization,” she added, “and I can still say that I don’t think there was malice behind it at all.”

Administering the nearly four-million-word federal tax code involves so many arcane legalities, and is so fraught with potential to ignite Washington’s partisan skirmishes or infuriate taxpayers, that much of the I.R.S. is run by lawyers.

But the Exempt Organizations Division — concentrated in Cincinnati with fewer than 200 workers, according to I.R.S. officials — is staffed mostly with accountants, clerks and civil servants. Working for one of only three I.R.S. divisions not charged with collecting tax revenue, specialists in the Determinations Unit in Cincinnati primarily review and process roughly 70,000 applications for exemptions each year, relatively few from groups engaged in election activity.

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“I don’t believe there’s any such thing as rogue agents,” said Bonnie Esrig, a former senior manager in the I.R.S. office in Cincinnati.CreditTy William Wright for The New York Times

Inside the agency, the unit was considered particularly unglamorous. “Nobody wants to be a determination agent,” said Jack Reilly, a former lawyer in the Washington office that oversaw exempt organizations. “It’s a job that just about everybody would be anxious to get out of it.”

Flood of Applications

In recent years, the office’s biggest headache was not the rising tide of political groups seeking tax exemptions or the growing calls from Washington lawmakers, chiefly Democrats, demanding closer scrutiny of big-spending political operations claiming tax-exempt status. The office was consumed with a different problem: a tweak Congress had made to the tax code that threatened more than 400,000 nonprofit groups around the country with an automatic loss of tax exemption, potentially putting some out of business, according to a report by the Taxpayer Advocate Service, which handles complaints about tax cases. Tens of thousands of such groups had reapplied for exemptions, overwhelming the office with queries and paperwork.

The rules governing those traditional charities, known as 501(c)3 groups, are relatively clear. But after the Supreme Court’s 2010 Citizens United decision on campaign financing freed corporations and unions to spend money on elections, hundreds of new applications began to arrive from Tea Party and other organizations. Most sought a different status, 501(c)4, under which “social welfare” nonprofit groups may engage in a limited amount of election activity without registering as political action committees and disclosing their donors.

Those indicating that they will intervene in elections typically receive closer scrutiny, former I.R.S. officials said, because of the potential that they may not be entitled to a tax exemption.

It is not unusual for I.R.S. specialists to search for patterns in applications, in part for clues toward fraud and scams — a single tax preparer employing the same tax gambit for multiple clients, for example — and in part to ensure that similar groups are treated in a consistent way, the former officials said.

It is not yet clear which manager in Cincinnati asked for an initial keyword search of Tea Party applications, Congressional aides said. One of the employees that the House committee is seeking to interview this week, Joseph Herr, had been a manager in charge of the group of specialists in Cincinnati from its inception through August 2010, according to the aides.

By October 2010, a batch of 40 cases were under heightened review, 18 of them with “Tea Party” in the group names. Specialists throughout the Determinations Unit had been issued a “Be on the Lookout” notice for Tea Party applications, and some were given training on how to evaluate groups planning to do election-related work, according to the I.R.S. inspector general.

In October 2010, as part of a reorganization of the unit, responsibility for the cases was shifted to a different group of specialists. Some applications that had been farmed out to Determinations Unit specialists elsewhere were moved back to the Cincinnati office.

One manager there complained that the “technical unit” — lawyers, chiefly in Washington, who advise the specialists on the tax law — had been slow in providing guidance on the applications, according to the inspector general. Over the next several months, the inspector general said, low-level specialists, managers and the lawyers appeared to struggle to come up with a consistent set of criteria and questions to ask the groups.

Philip Hackney, who was an I.R.S. lawyer in Washington, occasionally reviewed the exempt unit’s work until 2011 and was not involved in the Tea Party cases. He said that several times he and other lawyers revised the procedures the Cincinnati employees devised to scrutinize applicants because their questions might be interpreted as intrusive or politically insensitive.

“We’re talking about an office overwhelmed by 60,000 paper applications trying to find efficient means of dealing with that,” said Mr. Hackney, who is now a law professor at Louisiana State University. “There were times where they came up with shortcuts that were efficient but didn’t take into consideration the public perception.”

As the review process slowed to a crawl, groups whose applications were hung up in I.R.S. purgatory pressed for any information they could glean from the specialists handling their cases. Occasionally they got glimpses of what was unfolding behind the scenes.

The Shenandoah Valley Tea Party Patriots, a small group in Virginia, applied for 501(c)4 status in the spring of 2010. The organization’s application was assigned to Elizabeth Hofacre, who appears to have handled many of the initial applications flagged for review.

Frustrated by the slow pace, Mark Daugherty, the group’s treasurer at the time, called the Cincinnati office in February 2011. He said in an interview that he was directed not to Ms. Hofacre but to a different I.R.S. employee, who told Mr. Daugherty that he had a “stack of Tea Party applications” on his desk and that they were getting special scrutiny because they represented a “new type of animal.”

Tom Clifton, the treasurer of the Mid-South Tea Party in Memphis, said he called the I.R.S. repeatedly over the year and a half it took for his group to win approval of its tax-exempt status. Every time, he said, the agency employees he talked to alluded to how they were “overrun with applications” or told him, “You don’t have any idea how much we have to do here.”

“Most of the time, I would ask, ‘Well, if that’s the case, why do you have to have so much information that doesn’t seem pertinent?’ ” Mr. Clifton said, referring to several rounds of follow-up questions he received. “None of them could ever answer that.”

Washington Intervention

In July 2011, Lois Lerner, the director of the Exempt Organizations Division in Washington, held a briefing with employees involved with the review. She learned just how far off track the Cincinnati office had gone: specialists had been told to flag not only Tea Party groups, but applications describing particular policy views, like opposition to federal spending, that tend to be espoused by conservative groups. In all, more than 100 applications had been flagged. Almost none had been approved.

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Steven T. Miller, the acting I.R.S. commissioner who has resigned, called the agency’s actions “obnoxious,” but told the House Ways and Means Committee they were not motivated by partisanship.CreditCreditT.J. Kirkpatrick for The New York Times

Ms. Lerner insisted that the specialists broaden their criteria to flag any group that had suggested plans for lobbying or political activity, according to the inspector general. But a few months later, in November, according to the inspector general, a midlevel official in Washington temporarily overseeing the Cincinnati office told a supervisor there that the guidance was “too lawyerly.” The guidelines were revised several times, as new specialists and lawyers joined the effort.

By January 2012, employees in Cincinnati, apparently without consulting senior officials, chose new keywords, including “educating on the Constitution” and “social economic reform/movement.” That month, the specialists in Cincinnati and elsewhere began sending out increasingly exhaustive, sometimes intrusive questionnaires.

More than 20 months after applying to the I.R.S., the Shenandoah Valley Tea Party Patriots received its first follow-up letter. Signed by Mitch Steele, another specialist in Cincinnati, it listed 38 questions, including requests for copies of all of the group’s newsletters, a résumé for each of the group’s officers and the names of any officer who had plans to run for public office.

Marcus Owens, who served as the director of the Exempt Organizations Division until 2000 and is now a private tax lawyer, said he believed that the specialists were trying to develop a single, long survey that could be sent to many kinds of groups.

“There was an effort at standardization of questions,” Mr. Owens said. “So they might have made the list longer in an effort to have a one-size-fits-all questionnaire so they could just send it out the door.”

Not all conservative groups that got special scrutiny received follow-up requests for additional information. But some liberal groups did: Progress Texas, part of a national network of liberal advocacy groups, ProgressNow, received a follow-up questionnaire from the I.R.S. in February 2012, similar to the ones many Tea Party groups received, containing 21 questions. It took 479 days for Progress Texas to be approved, officials there said.

The inspector general would determine that I.R.S. agents asked 170 applicants for additional information, with 98 asked at least some questions that were unnecessary. Donor lists — a particularly sensitive topic because they do not have to be disclosed to the public — were requested from 27 groups, 13 of them with Tea Party names, according to the inspector general.

The intrusive questions prompted many of the Tea Party groups to complain that they had been targeted by the I.R.S. in an election year. Ms. Lerner ordered the Cincinnati unit to stop issuing new requests for more information, while other managers sought to retract some requests for donor information and grant extensions for answering questionnaires to other groups caught in the net. In Washington, word of the problems began to percolate through the upper ranks of the I.R.S., though exactly how much was known — and by whom — is not yet clear.

Headway on Approvals

By last May, the bureaucratic machinery in Cincinnati had finally begun to chug into motion: after issuing no approvals for months to any organization that had been flagged for special scrutiny because of political activity, the I.R.S. issued a handful that month and then nearly 40 in June, many of them to Tea Party groups, according to public agency records.

But by then, the controversy had spread well beyond Cincinnati. Republican lawmakers demanded answers from Douglas H. Shulman, the I.R.S. commissioner at the time, who was appointed by President George W. Bush. He said he was unaware that any conservative groups had been targeted — a statement sure to figure in questioning when he testifies on the Hill this week.

Another year would pass before the agency publicly acknowledged a systemic problem, and then only at a conference of tax lawyers at which Ms. Lerner answered a question about the reviews. On Friday, it emerged that she had planted the question with an audience member.

Some former agency officials and outside advocates said they worried about the chilling effect the controversy could have on legitimate enforcement. Even as the agency was scrutinizing small nonprofit organizations, critics say, it appears to have done little to crack down on large 501(c)4 groups that spent at least half a billion dollars on political advertising during the last four years, some in seeming defiance of the I.R.S. rules. Efforts by the agency to clarify those tax rules — a potential first step toward curbing abuses — began last summer but are still in the early stages.

Mr. Hackney, the former I.R.S. lawyer, said he was disappointed that the agency had not had better management to prevent the missteps, particularly the delays. But he said he feared that the politically charged investigation might descend into a witch hunt that leaves low-level I.R.S. employees too intimidated to enforce the tax code.

“It would be tragic to see the I.R.S. be debilitated by this,” he said. “Its work is too important.”

Outside the Cincinnati office on Thursday, employees on smoking breaks voiced many complaints. Pay freezes, mandatory furloughs and the effects of sequestration were all testing their already low morale. But the scandal, some said, had made things worse.

“There’s a buzz in the office about this Tea Party situation,” said Neal Juarez, a case advocate in the Taxpayer Advocate Service. Like several other I.R.S. workers, Mr. Juarez was skeptical that employees in Cincinnati would have acted as they had without some direction from leadership in Washington.

“You know what they say when there’s trouble,” he added. “You know what rolls downhill.”

A version of this article appears in print on , on Page A1 of the New York edition with the headline: Confusion and Staff Troubles Rife at Cincinnati I.R.S. Office. Order Reprints | Today’s Paper | Subscribe